Regions Bank 2009 Annual Report Download - page 33

Our business has been and may continue to be adversely affected by recent conditions in the financial markets
and economic conditions generally.
The capital and credit markets have experienced unprecedented levels of volatility and disruption over the
last two years. In some cases, the markets have produced downward pressure on stock prices and credit
availability for certain issuers without regard to those issuers’ underlying financial strength. As a consequence of
the economic slowdown that the United States has been experiencing, business activity across a wide range of
industries face serious difficulties due to the lack of consumer spending and the lack of liquidity in the global
credit markets. Unemployment has also increased significantly.
A sustained weakness or weakening in business and economic conditions generally or specifically in the
principal markets in which we do business could have one or more of the following adverse effects on our
business:
• A decrease in the demand for loans and other products and services offered by us;
• A decrease in the value of our loans held for sale or other assets secured by consumer or commercial
real estate;
• An impairment of certain intangible assets, such as goodwill;
• A decrease in interest income from variable rate loans, due to potential reductions in interest rates;
• A decrease in non-interest income due to pending regulatory changes;
• An increase in the number of clients and counterparties who become delinquent, file for protection
under bankruptcy laws or default on their loans or other obligations to us. An increase in the number of
delinquencies, bankruptcies or defaults could result in a higher level of nonperforming assets, net
charge-offs, provision for loan losses, and valuation adjustments on loans held for sale.
Overall, during the past two years, the general business environment has had an adverse effect on our
business, and there can be no assurance that the environment will improve in the near term. Until conditions
improve, we expect our business, financial condition and results of operations to be adversely affected.
Recent market developments may adversely affect our industry, business and results of operations.
Dramatic declines in the housing market during prior years, with falling home prices and increasing
foreclosures and unemployment, have resulted in, and may continue to result in, significant write-downs of asset
values by us and other financial institutions, including government-sponsored entities and major commercial and
investment banks. These write-downs, initially of mortgage-backed securities but spreading to credit default
swaps and other securities and loans, have caused many financial institutions to seek additional capital, to merge
with larger and stronger institutions and, in some cases, to fail. Reflecting concern about the stability of the
financial markets generally and the strength of counterparties, many lenders and institutional investors have
reduced, and in some cases, ceased to provide funding to borrowers including financial institutions.
This market turmoil and tightening of credit have led to an increased level of commercial and consumer
delinquencies, lack of consumer confidence, increased market volatility and widespread reduction of business
activity generally. The resulting lack of available credit, lack of confidence in the financial sector, increased
volatility in the financial markets and reduced business activity could materially and adversely affect our
business, financial condition and results of operations.
Further negative market developments may affect consumer confidence levels and may cause adverse
changes in payment patterns, causing increases in delinquencies and default rates, which may impact our charge-
offs and provisions for credit losses. Continuing economic deterioration that affects household and/or corporate
incomes could also result in reduced demand for credit or fee-based products and services. A worsening of these
conditions would likely exacerbate the adverse effects of these difficult market conditions on us and others in the
financial services industry.
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